This Statement of Administration Policy provides the Administration's views
on the Department of Defense Appropriations Bill, FY 1999, as reported by
the House Appropriations Committee. Your consideration of the
Administration's views would be appreciated.

The Committee has developed a bill providing requested funding for many of
the Administration's priorities. We appreciate the Committee's decision to
fully fund the military pay raise and to fund critical readiness programs
at sufficient levels. Also, we are pleased that most of the modernization
priorities of the Department of Defense (DoD) are funded at or near
requested levels. The Administration, however, is disappointed that the
Committee bill, based on OMB's preliminary scoring, provides $255 million
below the President's request in order to increase funding for lower
priority military construction projects. Also, as discussed below, the
Administration has serious concerns about certain provisions included in
the Committee bill, which must be addressed satisfactorily as the bill
moves through the process.

The Administration strongly opposes any provision in the House version of
the bill that could be read to require prior congressional authorization of
actions taken by the President pursuant to his authority under the
Constitution. The President must be able to act decisively to protect U.S.
national security and foreign policy interests. This provision would send
the wrong signal to the world, including U.S. resolve regarding Iraqi
compliance with its obligations with respect to weapons of mass
destruction, the SFOR operation in Bosnia, and efforts to deter Serbian
President Milosevic from attacks on the people of Kosovo. The President's
senior national security advisers would recommend veto of a bill with a
provision such as this one that could be interpreted to restrict the
President's exercise of constitutional authority.

Funding for Bosnia

The Administration regrets that the Committee has not included funding for
our ongoing operations in Bosnia. U.S. military presence, albeit at lower
force levels, is critical for continued progress in implementing the Dayton
Peace Accords. Moreover, a secure funding source for these operations at
the start of the fiscal year will allow the Department to manage its
readiness accounts effectively throughout the year. Although funding
requirements for operations in Bosnia were not known when the FY 1999
Budget was prepared, the Administration created a funding reserve in the
budget to cover these costs, and on March 3, 1998, the President requested
funding for this purpose. The Administration strongly urges the Congress
to provide emergency funding in the Defense appropriations bill to support
the U.S. troops in Bosnia.

Year 2000 Reserve Funds

The Administration appreciates the emphasis that the Committee has placed
on Year 2000 (Y2K) computer conversion activities. In the FY 1999 Budget,
the President requested $364 million for Y2K computer conversion. We
recognize, however, that ensuring DoD compliance may require the
flexibility to respond to unanticipated requirements. As such, we would
intend to employ the contingent reserve set aside by the Committee only to
the extent necessary, in order to ensure funds are available to address
emerging needs.

The Administration would strongly oppose efforts to strike the emergency
contingency fund from this bill. The value of the emergency mechanism
approved by the House Appropriations Committee is the flexibility it
provides in the event that we determine that additional resources are
required. We have only 555 days until January 1, 2000. We want to solve
this problem as soon as possible. By delaying approval of emergency
funding and reopening the issue of the use of the emergency spending
authority, the House will create controversy and delay. We hope the House
will reconsider.

Operation & Maintenance (O&M) Adjustments

The Administration appreciates the Committee's emphasis on preserving
military readiness by funding critical O&M programs. Force readiness
could be threatened, however, by the bill's undistributed reductions to
other O&M programs, such as civilian personnel pay, travel, and
headquarters activities. The President's request is tightly constructed
within the discretionary caps agreed to in the Bipartisan Budget Agreement.
Any adjustments must be carefully evaluated to ensure that DoD has
sufficient funding available for its operations and support programs. The
Administration is extremely concerned about reprogramming restrictions on
O&M accounts that would hinder a field level commander's abilities to meet
emerging mission requirements. Prior to final action on the bill, the
Administration would like to work with the Congress to develop
reprogramming guidelines that avoid restrictions that would impede
commanders' actions to maintain force readiness yet satisfy Congressional
oversight responsibilities.

Funding Levels

The Committee bill funds unrequested programs at the expense of DoD FY 1999
requirements. Also, the Committee provides funds for programs that, due to
higher priority military requirements, are not in the Future Years Defense
Program (FYDP). These increases include $86 million for modifications and
upgrades to B-2 bombers, $398 million for seven additional C-130J airlift
aircraft, $60 million for two unrequested F-16 fighter aircraft, and $120
million for National Guard and Reserve equipment. Instead of funding these
unrequested programs, the Administration urges the Congress to restore
disruptive decreases for key DoD modernization programs, including the
following:

$70 million decrease for the F-22 program, the $220 million decrease
for the F/A-18E/F program, and the elimination of funding for the
Aerostat program ($103 million);

reduction for research and development funding of two important Navy
programs: the next generation aircraft carrier (CVX-78) and the land
attack destroyer (DD-21). The Committee would reduce aircraft carrier
development by $90 million, a 47-percent decrease from the President's
request, and research funding for the DD-21 next-generation destroyer by
$69 million, an 81-percent decrease from the President's budget.
Reductions of this magnitude would jeopardize the Navy's ability to
design new technologies, to deliver these new technologies on schedule,
and to achieve life-cycle cost reductions -- a major goal of both
programs;

$59 million cut from the President's request for Chemical Agents and
Munitions Destruction. This reduction could delay a program that is on
schedule to meet the obligations of the Chemical Weapons Convention;

$5.5 million cut to the anti-personnel landmine alternative research
and development (R&D) program (the Remote Anti-Armor Mine System) and
the $9 million cut to the humanitarian de-mining R&D program; and,

$10.9 million reduction made to the Global Combat Support System
(GCSS). This system will provide technical systems, common technology,
and shared data standards that are required for the DoD electronic
commerce (EC) initiatives, a key reform objective.

$58 million reduction to basic research programs. Defense basic
research provides the foundation for tomorrow's military superiority and
supports colleges and universities across the country in training
tomorrow's defense scientists and engineers.

Theater High-Altitude Area Defense (THAAD)

The Administration urges the House to support the Ballistic Missile Defense
Organization's request for Theater High-Altitude Area Defense (THAAD). The
THAAD program remains the DoD's most mature upper-tier missile defense
program. Recent test failures indicate a need to restructure the program,
but a complete review will be necessary before this can be accomplished.
The Administration intends to work with the Congress on an appropriate
funding profile.

Cooperative Threat Reduction (CTR)

The Administration urges full funding of the FY 1999 request for the
Cooperative Threat Reduction Program (CTR). Furthermore, we oppose
restrictions, imposed in the House authorization action (H.R. 3616) and
approved by the Appropriations Committee, that prohibit the use of CTR
funds for construction of a chemical weapons destruction facility in
Russia. These restrictions would institute a minimum one-year delay in
the current project schedule, thereby slowing the construction of a safe,
secure, and ecologically sound method of destroying these dangerous
munitions.

Commercial Operations and Support Savings Initiative (COSSI)

The Committee has provided $62 million for COSSI, instead of the $103
million requested. This program inserts commercial technologies in existing
defense systems, thus lowering support costs and increasing performance
while enabling already fielded systems to modernize quickly. The
Administration urges full support of this program.

High Speed Networks

The Committee makes a reduction of $34 million to networking research in
the Defense Advanced Research Projects Agency based on alleged duplication
of effort. However, any overlap was removed in FY 1998 as a result of an
interagency review mandated by Congress. Accordingly, the Administration
urges restoration of funding to ensure the security and survivability of
future military networks and systems.

Advanced Concept Technology Demonstrations (ACTDs)

The Committee has cut the request for core ACTD funding by $35 million, to
$81 million. This program supports work on new and innovative defense
system concepts, and it could provide the basis for systems yielding a
decisive military edge over adversaries in the next century. The
Committee's funding level for this program would not provide sufficient
funds to support ongoing ACTDs and would preclude initiation of any new
ACTDs in FY 1999. The Administration urges the Committee to fund the
program at the requested level.